NAB Morning Call

Monday 5th August 2024NAB Markets Research Disclaimer Financial Services Guide | Information on our services - NABThere was a strong response to the weaker than expected US payrolls numbers on Friday, not on the heals of weak manufacturing data. Markets will be sensitive to the Services today, in case it adds another blow to US growth and fuels more inflation speculation.NAB’s Taylor Nugent says part of the concern is that Friday’s rise in unemployment, from 3.8% in March to  4.3% in June, meets the criteria for the Sahm Rule, which is seen as a stronger predictor of a forthcoming recession. The news on Friday was felt across most asset classes, with equities in the US and Europe particularly feeling the hurt. Whilst the Fed might be scrambling to play catch-up on rate cuts, Huw Pill has suggested the Bank of England is still fighting inflation, and the RBA is expected to remain on hold tomorrow. 

Friday 2nd August 2024Please note this communication is not a research report and has not been prepared by NAB Research analysts. Read the full disclaimer here.The latest Bloomberg New Energy Outlook seems to show that globally we are way off the mark when it comes to reaching Net Zero by 2050. Instead, the report suggests we could still be pumping 25 gigatons of carbon dioxide into the atmosphere. That’s less than today but not enough of a reduction to contain temperature growth. The numbers are based on Bloomberg’s Economic Transition scenario, which assumes we let the economy drive the decision making, without any further policy or investment strategies. But Leonard Quong, head of Australian research at Bloomberg NEF, says the differential between Net Zero and the Economic Transition scenario has been narrowing each year, so there is grounds for optimism. They also touch on the question of nuclear energy. It might make sense in some markets, but is it right for Australia?

Friday 2nd August 2024NAB Markets Research Disclaimer Financial Services Guide | Information on our services - NABThe US share market has taken a bit of a beating after US manufacturing numbers came in a lot softer than expected. It was another sign of a US slow down that has some clearly wondering whether the Fed will cut more this year. There is no waiting for the BoE. They cut rates but NAB’s Gavin Friend says it was a finely balanced decision. Services inflation continues to be the UK’s Achilles heal, but their manufacturing numbers are doing better than most. Tonight all eyes will be on the US non-farm payrolls, particularly as Jerome Powell has indicated that the fed will be looking closely for any slowdown on the jobs market as, with inflation largely under control, it focuses more on the second part of its dual mandate.

Thursday 1st August 2024NAB Markets Research Disclaimer Financial Services Guide | Information on our services - NABIt’s been a busy session, with US shares shooting higher as the Fe keeps rates on hold but the market reading the fed’s commentary of a September cut even more likely. During the press conference Jerome Powell basically said it was on the table if things carried on as they are. NAB’s Taylor Nugent talks through the latest from the Fed, and suggests that yesterday’s softer than expected CPI print for Australia puts paid to any further talk of rate rises. But it’s also not good enough to bring forward cuts. The Bank of Japan did lift rates by 15bp, pushing yields up and a 2 percent rise in the Yen. Today the Bank of England meets. Will they really cut rates head of the Fed? And Meta reported strong earnings after the close, helping bolster after-hours trade.

Wednesday 31st July 2024NAB Markets Research Disclaimer Financial Services Guide | Information on our services - NABIt’s a packed episode of The Morning Call today as Phil gets NAB’s Ray Attrill to take us through the latest GDP and inflation data from Europe, jobs data from the US and, from China, the Politburo’s promise to jump into action and reach 5% GDP, without really saying how.  Today Australia’s CPI is the main point of interest because it could drive the RBA to an interest rate rise. A rise is expected from the bank of Japan later, perhaps a little more than previously thought. And Microsoft’s earnings results came in stronger than expected, but the after hours share price clearly didn’t like the softer results for intelligent cloud revenue.

Tuesday 30th July 2024NAB Markets Research Disclaimer Financial Services Guide | Information on our services - NABIt’s been a quiet session, with shares and bond markets moving very little, as we await the Fed and some high-profile earnings results. We’ve seen very tight trading ranges, says NABs Skye Masters on today’s podcast. The mood music though is one of an anticipated slowdown. That’s why oil prices and industrial metals are down so much. McDonalds reported a fall in global sales in their latest earnings report. European GDP is the major number out today, a long with job openings for the US. And listen in for how US earnings results give a foretaste of where the US employment market is heading. 

Monday 29th July 2024NAB Markets Research Disclaimer Financial Services Guide | Information on our services - NABGet ready for a busy week, with US jobs umbers, Australian inflation, three ig earnings results from US tech giants; and the Fed meets, so does the Bank of England and the Bank of Japan. NAB’s Rodrigo Catril says one will stay on hold, one is expected to lift rates and the other is 50:50 on a cut. He also discusses with Phil last week’s core PC numbers, which showed inflation was slowing, along with earnings and consumer spending. A scenario that is very supportive of cuts by the FOMC.

Friday 26th July 2024Please note this communication is not a research report and has not been prepared by NAB Research analysts. Read the full disclaimer here.Things are changing in Japan. After decades of not much happening, suddenly everything is happening. Core inflation is up to 2.6%, the Yen is the weakest in a long time, the stock market has hit highs not seen since the eighties, and the BoJ has moved interest rates into positive territory. It all points to a win for Japan according to Harry Ishihara, a macro strategist contractor for Macrobond and Japan Exchange Group. Suddenly companies feel enabled to raise prices and offer higher wages, helping increase margins and drive investment. He calls it Japan’s Inflation Revolution. But will it last? Was this the shot in the arm the economy needed, and how much is being driven simply by a weaker Yen. What’s to stop that weakness being eroded and Japan’s competitiveness diminished? Harry provides some very useful insights into what’s driving the value of Japan’s currency and why a weaker Yen could be here to stay.

Friday 26th July 2024NAB Markets Research Disclaimer Financial Services Guide | Information on our services - NABA sharp turnaround in US optimism it seems, with this week’s disappointing PMIs easily overwritten by an upside surprise on GDP. Jobless claims were also down a little. The response – rising equities and falling Treasury yields. Phil asks NAB’s Rodrigo Catril whether Goldilocks is back on the horizon, offering a faster path to cuts with minimal economic damage. It’s a very different story in Europe though, where we saw PMIs sharply lower in Germany and reaffirmed by the IFO numbers out overnight. Of course central bank decisions ultimately rest on inflation numbers, so Tokyo’s CPI and June’s US Core PCE Deflator reads will be watched keenly.